George W. Bush hit his first speed bumps along the campaign trail this week. While the national media dogged him for finessing questions about possible past drug use, Bush was facing a potentially much more serious issue back home in Texas, where a simmering influence-peddling scandal continues.
"Formaldegate" -- named for the funeral-home industry at the scandal's center -- is an intriguing tale of death threats, leaky dead bodies and political cronyism. At its center is a self-styled whistle-blower who says Bush blasted her out of state government when her commission got too close to a Bush family buddy, the largest owner of funeral homes in the world. But is it a real story, or simply a political vendetta launched by a Texas Democrat to derail Bush's White House hopes?
The answer lies with the central figure in the scandal, Eliza May, a 45-year-old Austin Democrat who claims she was fired from her job as executive director of the Texas Funeral Service Commission for blowing the whistle one of Gov. Bush's friends and political donors.
When May came to the TFSC in 1996, the agency was in shambles. Five months before May started work, her predecessor at the commission, Wayne Butterfield, was arrested on charges of aggravated perjury and witness tampering. The executive director before him left after being hit with charges of sexual harassment. State inspectors were hammering the agency. In 1990, the state's sunset commission recommended that the TFSC be abolished because it was taking "minimal and ineffective" action to resolve consumer complaints. In August 1995, just 11 months before May accepted the executive director's job, the state auditor's office uncovered a hearse-load of problems including lax licensing, shoddy inspections and poor internal operations.
May knew there would be hassles when she applied for the job. After years of working for the state, she was used to them But May never would have guessed that her stint as executive director of the Texas Funeral Service Commission would last just 31 months, that her life would be threatened on the job or that she would end up in the center of a growing controversy involving the man favored to be the next president of the United States.
In March, May filed suit against the state of Texas. It alleges Gov. Bush and other state officials tried to thwart her agency's investigation into Houston-based Service Corporation International. May also sued SCI and the company's CEO, Robert Waltrip.
Just as Paula Jones' lawsuit caused big problems for President Clinton, so could May's lawsuit pose problems for Bush. Like Clinton, who fought Jones' efforts to get his deposition, Bush is fighting a subpoena issued by May's attorneys.
But there are some key differences between Jones' case against Clinton and May's suit against the state. First and foremost, Bush is not a defendant in May's lawsuit. Secondly, Jones sued Clinton for his personal conduct. May's suit against the state is seeking Bush's testimony about his actions as governor and whether he or his employees did anything to hamper or halt the TFSC's investigation into SCI.
On Wednesday, May's lawyers raised the stakes, asking a Travis County court to find Bush in contempt for not telling the truth about his interactions with SCI officials in a sworn affidavit. Like Jones, May is being hit with allegations that her motivations for pursuing the whistle-blower suit and the deposition of Bush are political. In an Aug. 5 motion to quash the subpoena of Bush, Texas Attorney General John Cornyn argued that the deposition was being "sought purely for purposes of harassment."
On Wednesday, Bush made the same charge. During a press conference in Austin, he referred to May's lawsuit as "frivolous" 12 times. "This is a frivolous lawsuit; this is politics," he said.
In March, one of SCI's lawyers, Johnnie B. Rogers, insisted that May began the investigation into SCI because she was "trying to run for governor à la Ann Richards." Rogers added that May had used her position at the TFSC for political purposes and that "she thought she'd take on the biggest funeral giant in the world and put it on her wampum belt and become the Jessica Mitford of the funeral business."
Rogers may have a point. May has been active in Democratic politics on the city and state level for more than a decade. From 1994 to 1996 she served on the state Democratic Executive Committee. From 1996 to 1998 she was the treasurer for the Texas Democratic Party. She has also served on the finance committee for the Travis County Democratic Party, was active in the South Austin Mexican-American Democrats, the Hispanic Women's Network and the Austin Women's Political Caucus and served as a volunteer on several city and county boards and commissions. In 1996, she even considered running for Austin's City Council.
Her political affiliations have raised some eyebrows and fueled speculation that May is simply trying to embarrass Bush, who has received $35,000 in campaign contributions from SCI's political action committee since 1996. Two years earlier, in Bush's first gubernatorial bid, Waltrip contributed $10,000 to Bush's campaign. In addition, Waltrip and President George Bush are close friends. SCI donated more than $100,000 toward the construction of the Bush presidential library and Waltrip serves on the library's board of trustees.
Did May let her political leanings interfere with her duties while she headed the TFSC? "No. Absolutely not," says TFSC Chairman Dick McNeil, who voted to dismiss May from her job as executive director. Former employees agree with McNeil's assessment. One former employee, who asked that her name not be used, remembered May as "stern and honest." She also said that May was determined to turn the TFSC around. She was "professional and determined," says the former employee. So why was May fired? "The commissioners had to find somebody to take the fall and it wasn't going to be them," she said.
Questions about May's political motives are likely to continue. On Wednesday, a Bush spokeswoman, Linda Edwards, called May's lawyers' request that Bush be cited with contempt of court "a publicity stunt and an example of the frivolous misuse of the civil justice system." And there are likely to be allegations that one of her lawyers, Charles Herring Jr., a former chairman of the Travis County Democratic Party, is pursuing Bush for political reasons. That will be hard to prove. Both Herring and May's other attorney, Derek Howard, are experienced in whistle-blower actions. In 1996, Herring won a $1 million jury verdict in a whistle-blower case against the University of Texas. Herring has also authored two textbooks on legal practices.
In 1994, Howard sued former Democratic Gov. Ann Richards and several other state officials in a wrongful termination case. (Howard lost.) He currently has another whistle-blower case pending in which he is also seeking Bush's testimony. Both lawyers insist they are following normal procedures in whistle-blower cases and that in May's case, the facts appear to lead straight to Bush's office. "To suggest that this is about politics is absolute bunk," said Howard.
A slim, energetic woman with jet black hair and dark brown eyes, May has a quick laugh and a somewhat wary nature. During a brief interview in March, at her lawyer's office, her answers were guarded. Her lawyers have refused all requests for follow-up interviews.
A bilingual woman who grew up in the hardscrabble border town of Laredo, Texas, May has spent her entire career working for government and public-sector entities. In 1976, after graduating from Southwest Texas State University in San Marcos with a degree in sociology, she went to work for the Texas Department of Human Services, where she worked in the child welfare division. One person who worked with May at the agency recalls going with her to visit a woman who was having domestic difficulties. He says he was "amazed" by May's interpersonal skills. "I was really impressed. She really connected with this woman."
May went back to school, and in 1984 she got her master's degree in social work from the University of Texas at Austin. She went on to work as a legislative aide in the Texas House of Representatives and then to a series of jobs with Latino and women's advocacy groups. In 1992, she became the executive director of the Council on Sex Offender Treatment, a state agency with five employees.
In the spring of 1996, May decided to seek the executive director's job at the TFSC, an agency with 10 employees that regulates 1,200 funeral homes and issues licenses to embalmers and funeral directors. The job paid about $43,000 per year.
Kenneth J. Hughes, one of the TFSC commissioners who interviewed her, said May was "head and shoulders above anyone else we talked to." When May was hired, eight of the nine commissioners on the TFSC had been appointed by Bush. All of them knew that May was a Democrat. According to Hughes, her politics were not an issue. He said May was the best candidate and that the commissioners trusted her to run the agency properly and leave politics aside. By most accounts, that's what May did.
When May reported for work in August 1996, she was dismayed by the lack of discipline in the office. Workers were reading newspapers at their desks. Consumer complaints were being ignored. Sources close to the agency said May did little for the first six months or so. Then she began cracking down. "She told us you are paid for eight hours, I want you to work for eight hours," says one source. After that, the agency slowly began to delve into its backlog of complaints. In early 1998, during a routine audit of case files, the TFSC found that two people who were doing embalming work at two SCI funeral homes in the Dallas area did not have proper licenses.
That information, coupled with a complaint filed by a consumer, led the TFSC to begin an investigation into SCI that rocked the agency, led to May's dismissal and uncovered what appears to be a major influence-peddling scandal.
The agency's first action against SCI came when it denied several applications from embalmers who were apprenticing at SCI funeral homes. Then, the agency began asking SCI for embalming-related documents. SCI balked. So, on March 31, 1998, the agency exercised its legal right to issue subpoenas and demanded that SCI produce 15 months' worth of funeral-related documents. According to a report written by May, she received a letter on April 6 from SCI that said that "the SCI affiliates would not respond to the subpoenas."
Two days later Josh Kimball, an apprentice who was working on his embalming license at one of the SCI funeral homes and had been denied a license by the TFSC, called May at the TFSC office. May alleges that Kimball said, "I am going to kill all of you." (An SCI spokesman, Bill Miller, says Kimball was not working for SCI at the time he allegedly threatened May.) According to Austin Police Department records, May called at 12:25 p.m. to report the alleged threat. After the threat was allegedly made, the agency hired a security officer to guard the office during business hours. "I was concerned for my personal safety," May said later.
On April 10, 1998, Good Friday, TFSC employees armed with subpoenas showed up, unannounced, at the SCI funeral homes and demanded to see the documents they had requested 10 days earlier. The raid infuriated Waltrip the surly, burly CEO of SCI. A few days after the surprise inspection, he fired off a six-page letter to the agency and to Bush, questioning the agency's actions, which he called "outrageous, unwarranted and unexplained." He went on to say that the agency's "'storm trooper' tactics have no place in responsible government." He complained that the TFSC employees had been discourteous to the SCI employees, and said McNeil should "consider disciplinary action, including termination" of the staffers involved.
But Waltrip's power play was just beginning. Within days, half a dozen legislators had written the agency complaining about the Good Friday raid. Waltrip told McNeil and others that he was going to take the matter to the governor's office. On April 15, 1998, Waltrip and Rogers did just that.
They went to the Texas Capitol, where they met with Joe Allbaugh, Bush's chief of staff. During that meeting, according to a quote Rogers gave to Newsweek, Bush stuck his head into Allbaugh's office and asked Waltrip, "Hey Bobby, are those people still messing with you?" When Waltrip indicated that they were, Bush asked Rogers, "Hey, Johnnie B. Are you taking care of him?" Rogers replied, "I'm doing my best, Governor."
Rogers' version of events appears to contradict Bush's sworn affidavit in which he said he has "had no conversations with SCI officials, agents or representatives" about the state's investigation.
A month later, on May 18, May was called into a meeting in Allbaugh's office, where State Sen. John Whitmire, a Houston Democrat, demanded that she tell everyone in the room about her agency's investigation into SCI even though Waltrip and Rogers were sitting in the same room. May said the meeting "was clearly designed to intimidate me and to obtain information about what we were doing. They were unhappy with the fact that I was doing this investigation."
Despite SCI's political pressure, May continued examining SCI. On Aug. 3, the commission's complaint review committee voted to levy a fine of $445,000 against the company for violating state embalming laws, refusing to comply with subpoenas and not informing consumers that third-party embalmers were involved in the transaction. (SCI is contesting the fine and has not yet been required to pay a dime.)
The same day the agency voted on the fines, a private investigator working for SCI called three of May's friends: Dennis Garza, Jeff Heckler and Pat Crow. "He wanted to meet with me," said Crow, an Austin political consultant. "He wanted some dirt on Eliza May. And I didn't have any. He called me three times. He said some negative things about her. I didn't respond and didn't comment."
Bill Miller, the Austin public relations consultant and political operative who represents SCI, says the investigation of May was dropped right after the company hired him a year ago. Was the company trying to intimidate May? "Not since I got hired," replied Miller.
Shortly before Christmas, the agency and SCI began mediation to resolve their dispute. Despite two days of talks, no agreement was reached. Meanwhile, the pressure on May was building. On Jan. 25, May was put on administrative leave and on Feb. 8, in a unanimous vote, the nine members of the commission voted to get rid of her.
Proof that May's investigation into SCI's embalming practices was justified didn't take long to emerge. And the proof came in the form of embalming fluid that began leaking out of Tres Hood's crypt shortly after he was entombed in July 1998. Hood, a popular 31-year-old television news anchor in Wichita Falls, died of colon cancer. His parents signed a contract with a Wichita Falls funeral home owned by SCI to embalm their son's body. But Hood's parents didn't know that his body was going to be embalmed in Dallas. In fact, his body was embalmed at one of the two SCI funeral homes that had originally been targeted for investigation by the TFSC for illegal embalming practices.
The problems with the embalming were apparent almost immediately. When Hood's family members came to see his body, they were horrified. "I could see fluid coming out of his eyes and mouth. I guess it was embalming fluid. It looked terrible. I made them close the casket because he looked so bad," says Jeremy Johnson, Hood's younger brother. According to a lawsuit filed in June by Hood's parents against SCI, after Hood's casket was put into a mausoleum, "problems with odors, gnats and fluid seepage began to occur."
The ghastly details of Hood's embalming are just one part of the SCI-Eliza May story that are going to come out in the next few months. Discovery in the Hood lawsuit will begin soon and many of the same people that will testify in May's whistle-blower lawsuit will also be testifying in the Hood case.
While the political aspects of May's lawsuit cannot be ignored, even her detractors are expressing amazement at SCI's power play. Not only did the company stop the investigation and avoid paying any fines, it hired a lobbyist to write a bill and then convinced the Texas Legislature to pass a measure that overhauls the TFSC and strips it of some of its powers.
An early fan of May, TFSC Commissioner Hughes, a Bush appointee, says he lost confidence in her earlier this year and voted to dismiss her. But now that he's leaving the agency, Hughes admits being impressed with SCI's power. "SCI poured the money in the right places and kicked our butts out," he said. "They told us, 'We'll go to the governor and get this thing thrown out.' I didn't think they were that strong. I didn't think they could buy that many people."
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